Newbie....with some questions

My husband and I filed Chapter 7 Bankruptcy, discharged July 2004, almost 3 years ago and immediately went to work on improving our credit scores. Even before our case was discharged, we were approved for a car loan on a 6 month old car (still financed as new since it was used as a Lease by the Dealer and never sold before) by Key Bank at 16.99%. I was thrilled with this at the time since I had a 10 year old car and knew my timely payments would improve our scores.

My husband's truck was refinanced through a Redemption Loan through the BK7 for market value ($5,200 instead of the previously owed $16,000) at 24.99%. Of course, this was a very high interest rate but we chopped off more than 2/3 of the amount owed on the vehicle and were set up with low payments for 3 years. Again, we paid every month either on-time or early, never late, to improve our scores.

We both applied and got Orchard Bank credit cards with $300 limits in Nov. 2004, 4 months after our discharge. We used both our cards regularly to establish credit history but tried to stay below 50% usage of total credit and always paid on time and more than the minimum, if not the full balance. They most important thing in rebuilding your credit score is to actually use the credit you have in a responsible way to prove to the creditors that you can be "trusted" with more credit, in addition to increasing your score.

It took awhile for Orchard Bank to increase our credit limits to $500 (January 2006), over a year and a half. Here's what Orchard Bank advised us about credit limit increases (received in writing):

"You can improve your chances of receiving an increase by:
*Making payments on time
*Staying within your established credit limit
*Making more than the minimum payment when you can"
(They will definately not increase your credit limit before one year history)

I also received another Orchard Bank VISA in December 2005 ($300 starting limit - now at $450) and Capitol One Platinum MC in March 2005 ($500 limit). I called Capitol One today when I realized that I have never received a credit limit increase and was told by the Rep that I was not approved for an increase even though my credit payment history is perfect. I explained to this Rep how all of the other cards have been increased, including new ones I've received which much higher limits (see below) and I didn't understand why Capitol One refused an increase. He stated, "Capitol One has made a business decision which involves being very conservative in issuing credit and increasing limits". Wow, talk about being conservative. He said I would be receiving a letter explaining why I was denied an increase and I have to assume that I am being "red flagged" with the BK on my record. Or Capitol One only wants consumers with over 700 scores. Hmmm, guess I won't be using them much. BUT, I won't officially close the Capitol One account since that would reduce my available credit, affecting my debt ratio %, and lowering my overall credit score.

The best credit cards we got after the BK were with Direct Merchant in November 2005. I received a $1000 limit and my DH received only $400. Not sure why but I've always had more credit history and trade lines than him. 3 short months later, Direct Merchant automatically increased our limits to $1500 and $600, respectfully. Followed by further increases to $2000 on mine in October 2006 (less than a year after receiving the card) and $1100 on my hubby's in January 2007 (again, less then my limit and 3 months later).

Since we were getting higher limits with existing cards and our credit scores had improved greatly over these 2 years, we decided to apply for another credit card with a better interest rate so we would have more available credit for emergencies. 2 months ago, in January, we were approved for cards with Juniper at 11.99% fixed and no annual fee with a $3500 limit for me and $2500 for my hubby. (Poor guy, never gets a higher limit than me, lol.)

Since an important part of your FICO score calculations includes the % debt ratio to available credit, it is important to increase your limits and/or add another card or two. Adding each other as authorized users will add a trade line to your credit report for each card so you might want to do that to add more available credit (better % ratio) to each of your reports. I know my husband is an authorized user for my Direct Merchant $2000 card and it is listed as a trade line on his credit report.

You also mentioned in your post that all of your cards have little balances, nothing over $50, which you pay monthly on time. My question to you is, what was your highest balance on each card (% to available)? Have you been using the cards enough? If you have a $300 card, you need to use it around 50% average ($150) to show that you can pay it back. The bigger Care card with $2700 limit.....what is the most you have ever charged on it, the highest balance? You don't need to have 50% charged ALL the time, but you have to do it one or twice to prove that your are credit trustworthy. Why would someone give you more money/credit if you've never shown since your BK, that you can pay it back? You know what I mean?

Try charging something that you already have the cash for in your savings or checking account. This way you can show that you have used a higher amount of credit and you paid it back quickly and on time.

The other part is reviewing your credit reports to see if there are any errors or trade lines you can dispute. Have you seen your credit reports recently or since your BK? I actually paid a lawyer who specializes in BK repair to dispute some of our negative trade lines which helped increase our scores. I only paid him for 6 months, so all of the negatives were not finished being disputed, eliminated and/or corrected so our scores are not as high as they should be (639 for me and 657 for hubby as of Jan. 2007).

In December 2006, when reviewing our reports again, I found a new collection account for a medical bill. Turns out a bill from an emergency room visit that was covered by insurance was not processed correctly, was never paid, and the hospital turned it over to collections. I never received notice of the bill (ever) or the collections since we moved out of state right after the ER visit. I immediately got on the phone with the Collection Agency, determined what the bill was for, called my Insurance Company, and submit the necessary paperwork for the bill to be paid. I am waiting and checking back to make sure it is paid in full and most importantly, that the trade line is removed. Hopefully, once that is accomplished, our scores will increase more. It is important to see each of your credit reports on a regular basis to check for accuracies, even if you have to pay for the reports.

Ok, I think my post is long enough, lol. Hope some of this information is helpful to you. Good Luck!

 

For the accounts included in bankrupcty, make sure that they are reporting as such on your credit reports. Even if they are, dispute them as inaccurate and/or incomplete through the credit reporting agencies. Target specific data fields such as the status (should be included in bankrupcty and this is all unless it was charged-off pre-petition), balance history, and dates of status/dates of initial delinquency. Chances are you can get some of them deleted which in turn will raise your scores.

As for other derogatory tradelines, if any, apply the above.

Consider signing up for True Credit so that you may "ethically" remove your inquiries on Trans Union and Equifax.

Finally, if you lack older, open, and positive accounts, consider asking a family member to add you to their accounts. A friend will serve this need as well. If this isn't a viable option, their are those which provide this service. Please be advised that some are more expensive than others and of course, check their credentials extensively.